Intro
Electronic payments deals with the
strategies for the payment of goods and
services by online customers.
Various instruments used are
Electronic Cash
Electronic Checks
Smart cards
Types of Electronic Payment
systems
Token based payment systems
Electronic Tokens in the form of Electronic cash/
checks
Electronic tokens can be classified as
Cash or real time
Debit or prepaid
Credit or postpaid
Credit card based payment systems
Using plain credit card details
Using encrypted credit card details
Using third party verification
Electronic Payments: An Overview (cont.)
Used to:
Authenticate the identity of the sender of a message or
document
Ensure the original content of the electronic message or
document is unchanged
Security for E-Payments (cont.)
Digital certificates
Identifying the Name : “Richard”
key-Exchange Key :
holder of a public Signature Key :
key (Key- Serial # : 29483756
Other Data : 10236283025273
Exchange) Expires : 6/18/04
Issued by a trusted Signed : CA’s Signature
certificate authority
(CA)
Digicash Model
Merchant 1- Consumer asks Bank for Digicash
2- Bank sends Digicash bits to consumer
3- Consumer sends Digicash to merchant
in payment
5
4 3 4- Merchant checks that Digicash has not
been double spent
Bank 5- Bank verifies that Digicash is valid
Advantages
2 Privacy, Scalability
Disadvantages
1
Complexity
Detecting double spending
Robustness against failure
Accountability
Consumer
Security for E-Payments (cont.)
Digital signatures
Source: informit.com.
InformIT.com SSL Encryption
Source: informit.com.
E-Cards
The Players
Cardholder
Merchant (seller)
Issuer (your bank)
E-wallets
One-click shopping—saving your order
information on retailer’s Web server
Name
Shipping address
Billing address
Purchase cards
Instrument of choice for B2B purchasing
Special-purpose, non-revolving payment cards
issued to employees solely for purchasing and
paying for nonstrategic materials and services
E-Cards
card issuer
Issuer verifies purchase authorization
E-Cards
Smart Cards
Integrated circuit (IC) microprocessor cards—
includes IC chips with programmable functions that
make cards “smart”
Integrated circuit (IC) memory cards—no processor
Suitable for uses where card performs fixed
operation
Disposable, prepaid (phone cards)
E-Cards
Proximity Card
Used to access buildings and pay for buses and
other transportation systems
Bus, subway and toll card in many cities
Embedded
chip
Source: Visa.
E-Cards
Financial
Information technology
Health and social welfare
Transportation
Identification
E-Cash and
Payment Card Alternatives
E-cash and credit card alternatives (for
micropayments—under $10)
E-cash (eCoin.net)
Identity of user hidden from merchant
Easier to use than earlier e-cash systems
Qpass (Qpass.com)
Set up Qpass account
User name and password
PrivateBuy
User establishes account
User assigned 16-digit user number (anonymous
address)
Hides user name and card number from
merchant site
Relies on credit card system already in place
PrivateBuy Anonymous Shopping
Source: privatebuys.com
E-Cash and
Payment Card Alternatives
Electronic purses
Lack of interoperable equipment and standards
Common Electronic Purse Specification (CEPS)
E-Cash and
Payment Card Alternatives
E-loyalty and rewards programs
Loyalty programs online
Beenz.com
• Consumer earns beenz by visiting, registering, or
purchasing at 300 participating sites
• Beenz are stored and used for later purchases
• Partnered with MasterCard to offer rewardzcard—
stored-value card used in U.S. and Canada for
purchases where MasterCard is accepted
• Transfer beenz into money to spend on Web, by phone,
mail order, physical stores
E-Cash and
Payment Card Alternatives
MyPoints-CyberGold
• Customers earn cash
• Cash used for later purchases or applied to credit card
account
RocketCash
• Combines online cash account with rewards program
• User opens account and adds funds
• Used to make purchases at participating merchants
E-Cash and
Payment Card Alternatives
Source: paypal.com.
E-Checking
Electronic checkbook
Counterpart of electronic wallet
To be integrated with the accounting
information system of business buyers and with
the payment server of sellers
To save the electronic invoice and receipt of
payment in the buyers and sellers computers
for future retrieval
Example : SafeCheck
Used mainly in B2B
E-Checking
eCheck Secure
Third party vendor with software for e-check
purchases
Aimed at B2C sites
E-Checking
Source: echecksecure.com
Digital of Signatures in E-Check Processing
E-Checking
Source: echecksecure.com
E-Billing Process for Single Biller
E-Billing Processes for Bill Consolidator
Managerial Issues
4
Consumer’s Bank Merchant’s Bank
ACH: Automated clearing house
Check
A B
1. A presents check to B.
2. B lodges
it.
A’s Bank B’s Bank
(Paying Bank) (Collecting Bank)
5. Verify funds 3. Credit B’s
availability and account and
debit A’s account. forward check
Clearing Clearing for clearing
Department Department
Clearing
House
4. Checks Exchanged.
Electronic Check Concept
Payer Order
Payee
Form Accounts
Signature Receivable
“Card”
E-Mail
Order &
WWW
Pay Info
Signature Order
Card Workstation
Check Deposit Slip
Signature
Check
Certificate E-Mail
Certificate Signature
Certificate
Secure Envelope
Certificate
Mail statement FTP Indorsement
E-Check line item
Certificate
Certificate
Secure Envelope
ACH
Deposit check
ECP
Payer’s Bank Clear check Payee’s Bank
Debit account Credit account
Electronic Check
Electronic Checkbook:
PCMCIA, Smart Card, PIN protected
Key storage
Signature and transaction logging
Credit Card
Acquirer
Internet
CyberCash
Consumer
Smart Cards
Magnetic stripe
Memory cards
Optical memory cards
Microprocessor cards
What makes the card smart?
CPU (8-bit, 16/23 bit)
Memory (RAM, ROM, EEPROM/Flash)
I/O channel (Contact/Contact less)
Cryptographic co-processor
On card devices (Fingerprint, display)
Standards (ISO 7816, GSM, EMV, VOP,
CEPS)
A variety of terminals
Embedded system
Standards (ISO
7816, PC/SC,
OCF)
Applications
Bank card
GSM SIM card
Health card
Pay-TV
ID card
Transport
Campus card
Mondex
Electronic
Wallet
SONY RC-S833
SMART CARD
if it has one